Bob Kettler On Huge Projects And New Markets
Kettler has become one of the biggest multifamily developers in the region, and it's only getting bigger. It has four massive DC-area projects in the pipeline and is expanding its reach into other markets. CEO Bob Kettler will discuss his company and his view on the DC real estate market at tomorrow's Washington DC State of the Market: Part 2.
The company looks drastically different than it did when Bob started it four decades ago, but he says its DNA remains the same.
"The birth of our multifamily business for us came out of the suburban planned community business," Bob tells Bisnow. "That carried over when the multifamily industry really started taking off in the '90s. We adapted the mixed-use, larger planned community model to vertical construction and TOD locations."
Bob says the company is now sought out by urban landowners with big plots to develop or by office developers looking for a multifamily partner for a mixed-use megaproject.
That was the case when The Meridian Group enlisted Kettler as its JV partner on The Boro, rendered above, an 18-acre, eight-building project in Tysons. At completion, it will have 2,300 residential units, about 2M SF of office space and 266k SF of retail.
Also in Tysons, Kettler is partnering with PS Business Parks on a 395-unit mid-rise luxury apartment community. In Columbia, Kettler is partnering with Howard Hughes again on on Phase 2 of Downtown Columbia, which will consist of a two-building, 437-unit project.
These big projects account for about 50% of Kettler's pipeline, Bob says, with the rest consisting of single-building projects in Adams Morgan, Rockville, Bethesda, Pentagon City and Crystal City. He says he is confident in the future of the DC market and is investing in more value-add properties.
"Job growth is projected to be very strong in this area. We're excited about it," Bob says. "We like the multifamily market, buying existing projects because interest rates are great, there is more demand than supply in the Class-B space.”
Kettler has recently begun expanding into new markets where Bob, snapped here with his son, Forest, at last August's Citi Open, says he sees even greater growth than the DC area.
Its first out-of-market acquisition came five years ago when Kettler bought a seven-building portfolio in Virginia Beach with Federal Capital Partners. In the last year, the company made 11 acquisitions in new markets, and Bob says he expects that pace to continue in the upcoming year. He said the company is expanding to several new markets, including Raleigh, Greensboro and Chapel Hill, NC, and Charleston, SC, and is looking at others in the Southeast.
"We like where they are in the cycle," Bob says. "Some of those markets are getting a little stretched and top heavy but we like the growth numbers and we like the upside in those marketplaces. Population growth, job growth, low taxes and good values are trending in the right direction.”
Kettler's rapid growth has led Bob to realize the need for new leadership to manage the operations of such a large real estate company.
In February Kettler tapped Usha Chaudary (above), a former Washington Post executive, as president and COO. Bob described Usha as "the ultimate senior executive," and said her expertise qualified her to manage a company of Kettler's size, roughly 1,000 employees.
"Like a lot of real estate companies, we were a collection of real estate professionals, we did our own jobs within the real estate framework," Bob said. "We had grown, and there's a certain point you get to where you want to expand geographically and you need to bring in professional managers.
"It gets too big and complicated for senior real estate people to operate it," Bob continued, "without somebody really looking at the whole structure all the time."
Come see Bob, JBG's Matt Kelly, First Potomac's Bob Milkovich, JLL's Greg O'Brien, C&W's Joe Stettinius and more tomorrow morning at Washington DC State of the Market: Part 2.